The ousted founder of a controversial Arabic public school has dropped an appeal of her free-speech case against the city, a lawyer for the city said yesterday.

Debbie Almontaser, who as principal of the Khalil Gibran International Academy in Brooklyn in 2007 came under heavy fire for appearing to defend the slogan “Intifada NYC,” filed two lawsuits against the city.

She won a favorable ruling from the Equal Employment Opportunity Commission this year, but both suits were dismissed in federal court.